Dept. of Health & Human Services Issues Interim Final Regulations for Children to Age 26

The new healthcare reform law permits young adults to remain on their parents’ healthcare plan(s) until age 26. Yesterday, the Departments of Health and Human Services, Labor, and Treasury have issued regulations implementing the Affordable Care Act by expanding dependent coverage for children up to age 26.

Key elements include the following:

Plans and issuers that offer dependent coverage must offer coverage to enrollees’ children until age 26:

even if the young adult no longer lives with his or her parents

is not a dependent on a parent’s tax return, or

is no longer a student.

there is a transition for certain existing group plans that generally do not have to provide dependent coverage until 2014 if the child has another offer of employer-based coverage aside from coverage through the parent

the new policy providing access for young people applies to both married and unmarried children, although their own spouses and children do not qualify.

The Rule is Effective for Plan or Policy Years Beginning On or After September 23, 2010. Secretary Kathleen Sebelius called on leading insurance companies to begin covering young people voluntarily before the implementation date required by the Affordable Care Act (which is plan or policy years beginning on or after September 23rd). Early implementation would avoid gaps in coverage for new college graduates and other young people and save on insurance company administrative costs of dis-enrolling and re-enrolling them between May 2010 and September 23, 2010. Over 65 companies have responded to this call saying they will voluntarily continue coverage for young people who graduate or age off their parents’ insurance before the implementation deadline. The Department of HHS Website has a comprehensive list of those insurance companies that have agreed to the early implementation.

All Eligible Young People Will Have A Special Enrollment Opportunity. For plan or policy years beginning on or after September 23, 2010, plans and issuers must give children who qualify an opportunity to enroll that continues for at least 30 days regardless of whether the plan or coverage offers an open enrollment period. This enrollment opportunity and a written notice must be provided not later than the first day of the first plan or policy year beginning on or after September 23, 2010. The new policy does not otherwise change the enrollment period or start of the plan or policy year.

Same Benefits/Same Price. Any qualified young people must be offered all of the benefit packages available to similarly situated individuals who did not lose coverage because of cessation of dependent status. The qualified individual cannot be required to pay more for coverage than those similarly situated individuals.